Perrinepod v Georgiou

The very short timescales imposed for an adjudication in the construction industry necessarily makes the process rather better suited for straightforward cases than for very complex cases, although it might also be noted that it is in very complex cases that the amount of time and money saved by the process is at its greatest.

For the purpose of the legislation in Western Australia and the Northern Territory, it is open for an adjudicator to dismiss the application without making a determination if he is satisfied that it is not possible fairly to make a determination because of the complexity of the matter (section 31(2)(a)(iv)) of the Construction Contracts Act 2004 (WA). Whilst the rationale behind such a provision is understandable it is was always evident that this provision was likely to give rise to controversy, in particular in cases where a respondent asserts that the dispute is too complex for adjudication, such that the adjudicator should have dismissed the application.

Section 46 of the WA Act gives a right to a person who is aggrieved by a decision under section 31(2)(a) to apply to the State Administrative Tribunal for a review. The Court of Appeal of the Supreme Court of Western Australia has just resolved a troublesome question on this provision, namely whether

it is there for the benefit of claimants only (allowing appeals by applicants who are disappointed by a decision of the Adjudicator to dismiss), or

it is also open to respondents (thereby allowing appeals by respondents who are disappointed by an Adjudicator’s decision to get on and hear the adjudication).

The conflicting decisions were to be found in O’Donnell Griffin v John Holland [2009] WASC 19 where Beech J found, albeit obiter, for the latter construction, and Match Projects v Arccon [2009] WASAT 134, where the Tribunal found for the former.

In Perrinepod v Georgiou [2011] WASCA 217, the Court of Appeal decided on 13 October 2011 that Match Projects was right and O’Donnell Griffin was wrong on this point; in other words, a respondent has no right to apply to the State Administrative Tribunal for a review of a decision by an adjudicator to get on and hear an adjudication, notwithstanding its complexity.

Accordingly, a respondent who thinks that an adjudication application should have been dismissed cannot obtain a review from the State Administrative Tribunal. That, however, is not the end of the story, because as the Perrinepod decision goes on to explain, if an appointed adjudicator gets on with an adjudication which ought to have been dismissed as being too complex, then the adjudicator would be acting unlawfully and without power, such that the prerogative writs of prohibition and certiorari would be available to restrain or quash the adjudication process. Although the provisions of the West Coast model are different from the East Coast model, this analysis is broadly consistent with the prevailing wisdom from the East as expressed in Chase Oyster Bar v Hamo [2010] NSWCA 190.

Should we expect, then, a rash of applications in Western Australia and the Northern Territory by respondents going to court via a prerogative writ seeking relief on the grounds that the adjudications are too complicated and ought to have been dismissed? This remains to be seen, but it would appear relatively unlikely that the courts will be quick to interfere with adjudicator’s decisions to get on and hear adjudications even in relatively complex cases.

As was noted in the Perrinepod decision, the purpose of the legislation is to maintain the flow of money, and “contractual and legal precision is required necessarily to yield, to a degree, to allow for the speedy resolution of disputes”; accordingly, the courts are unlikely to use their powers to prevent or unwind adjudicator’s decisions even in relatively complex disputes.

Note that in the Northern Territory, the review corresponding to section 46 of the WA Act is not to the SAT, but to the Local Court (see section 48 of the Construction Contracts (Security of Payments) Act (NT)). However, it seems that the same principles will apply.